Lot18 Closes $30M Round as Deals Sector Takes Off

Lot18, a New York-based, invitation-only site that started off selling wine online just a year ago, has raised $30 million in a third round of capital. The most recent round was led by Accel Partners. Existing investors New Enterprise Associates and FirstMark Capital also participated.

“That’s pretty huge for us,” Lot18′s founder Philip James said in an interview. “We are a year old. We launched on Nov. 10, and it’s a little bit of a surprise that we raised an ‘A,’ ‘B’ and ‘C’ in such a short period of time.”

Sameer Gandhi, who led Accel’s investments in Bonobos, Spotify and StumbleUpon, will join Lot18’s board of directors. Lot18 says the funds will support its continued growth and help expand its imported wine program, particularly wines from Europe. The idea being, Lot18 wants to offer its members more wines that they can’t get anywhere else.

Lot18′s deep focus on the wine industry has earned it the reputation of a first-class sommelier. In just one year, theNew York Citystartup has grown to 90 employees, poaching some of the finest wine connoisseurs the city has to offer. In May,Lot18 raised $10 million in a Series B funding round led by NEA Ventures and First Mark Capital, who also led Lot18′s $3 million Series A round. In those 12 months of operations, Lot18 has attracted over 550,000 members and sold more than half a million bottles of wine.

Last month the company launched Lot18 Experiences, which comprises wine- and gourmet-themed travel excursions, as well as local offers such as members-only wine-pairing dinners at Michelin-starred restaurants. Along with its ability to provide access to products and excursions of high quality, Lot18’s growth is driven by its commitment to transcending user experience and customer service.

Meanwhile, Groupon Inc. raised $700 million after increasing the size of its initial public offering, becoming the largest IPO by an Internet company since Google Inc raised $1.7 billion in 2004.

The global leader in “daily deals” is now valued at almost $13 billion after saying it increased the offering by 5 million shares to 35 million in total and pricing them at $20 each, above an initial range of $16 to $18.

The IPO debut of the three-year-old company, which sells Internet coupons for everything from spa treatments to nose jobs, is one of this year’s most closely watched. Its tiny float represents just above 5 percent of the company and helped drive up demand and price.

But in the long run, there cited concerns about competition from the deep-pocketed likes of Google and Amazon, the need to spend continuously to drive user growth, and questions about Groupon’s accounting methods after the company altered its IPO filings twice to change the way it accounted for revenue.

“Groupon is expensive. The $12.8 billion valuation is only achievable because of the low float,” said Rob Romero, head of technology-focused hedge fund firm Connective Capital Management.

“Today’s reaction to LinkedIn floating additional share supply is an indication of how tight supply-demand of shares can distort valuation for a new IPO.”

LinkedIn, which remains well above its $45 IPO price, plummeted 9 percent after-hours after unveiling a proposal to sell up to $500 million in stock. It had floated 8.3 percent of its shares during the IPO.

Pandora, a music streaming service and another recent dotcom debutante, sold 9.2 percent of the company. At $12.8 billion, Groupon commands a price tag more than twice what Google offered to buy the company at last year.